Basic Types Of Price Discrimination Essay - 1757 Words

Price discrimination is defined as charging different customers different prices for the same product. One major factor of price discrimination is elasticity of demand. Elasticity of demand measures the percentage of change in quantity to percentage of change in price. If the percent of change is greater than one, it is elastic. On the other hand, if the percentage of change is less than one, it is inelastic. For customers who are not price sensitive, or the demand is elastic, price discrimination raises the price. It lowers the price to customers who respond more to changes in price, or the demand is elastic. Whenever price discrimination is possible, it can be highly profitable for a business. Further, there are three different types of price discrimination. First-degree price discrimination, otherwise known as perfect price discrimination, is when a firm charges every customer exactly how much they are willing to pay for that good and charges a different price for every unity consumed. Some examples include car sales and roadside sellers of fruit and produce. Furthermore, second-degree price discrimination is when firms discriminate though volume discounts. This is when a firm charges a different price for different qualities and allows buyers to purchase a higher inventory at a reduced price. An example of this would be quantity discounts for bulk purchases. While benefiting the high-inventory buyers, it can hurt the low-inventory buyer who is forced to pay a higherShow MoreRelatedBasic Types Of Price Discrimination1740 Words   |  7 PagesPrice discrimination is defined as charging customers a different price for the same product. One major factor of price discriminat ion is elasticity of demand. Elasticity of demand measures the percentage of change in quantity to percentage of change in price. If the percent of change is greater than one, it is elastic. On the other hand, if the percentage of change is less than one, it is inelastic. For customers who are not price sensitive, or the demand is elastic, when using price discriminationRead MoreWhat is Price Discrimination? Essay1359 Words   |  6 PagesPrice Discrimination Price discrimination is charging consumers with different prices for identical similar products, which are not related to costs of production. An important point to mention, Products that varies in prices due to cost variation and justification are not considered as price discrimination. For example, charging different prices for the same product for different geographical locations does not result into price discrimination, because of the transportation or delivering cost differentialRead MoreKtm Case Study596 Words   |  3 Pagesspecialists). 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The manipulation of prices can be broken down into three main issues: price fixingRead MoreCultural Impacts of the Civil Rights Act1357 Words   |  6 Pagesinjected nations that stand for freedom and democracy. Our civil rights is the key to or success as a great nation. Find Law defined our civil right by giving rights of individuals to receive equal treatment (and to be free from unfair treatment or discrimination) in a number of settings -- including education, employment, housing, and more -- and based on certain legally-protected characteristics(â€Å"FindLaw† , 2009). According to Find Law, Civil Rights could also be described as the advancement of equalityRead MoreWal Mart : The United States Of The Nation And The Worlds Largest Retailer1628 Words   |  7 PagesStates of America are best known for their slogan there of everyday low-prices guarantee. 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Pricing policy is clearly very important to the marketing mix and is affected by variables such as firm’s objectivesRead MoreCase Study : Apple Inc.1568 Words   |  7 Pagesstructure, regardless of the level of consumer’s loyalty, the seller can easily lose market to competitors if the price of the products goes extremely high. As such, the players have little control over prices. The other type of market structure is perfect competition. In such markets, there usually many small players. Notably, none of them can influence the pricing system. They usually take prices as set by the forces of demand and supply. On the other hand, monopolies lie on the extreme opposite endRead MoreEth 316 Company Code of Ethics1035 Words   |  5 Pagesof employees. One reason for Wal-Mart’s is the value and hard work they put into upholding their code of ethics. Wal-Mart has three basic beliefs – respect for the individual, service to their customers, and striving for excellence. 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